Retirement U.S. Department of Health and Human Services Social Security Administration SSA Publication No. 05-10035 June 1993 ICN 457500 _______________________________________________________________ WHO SHOULD READ THIS BOOKLET? _______________________________________________________________ You should if you're starting to think about retirement. That's because Social Security will be part of the retirement plans of almost every worker in the United States. The decisions you make about retirement will be some of the most important ones you will ever make. This booklet provides information you need about Social Security benefits to help you plan for your retirement years. But retirement benefits are just one part of Social Security. If you would like to learn about other kinds of Social Security benefits, you can read about them in some of our other Social Security booklets. There is a list of publications on the last page of this booklet. PLEASE NOTE: This booklet provides a general overview of Social Security retirement benefits. The information it contains is not intended to cover all provisions of the law. For specific information about your case, contact Social Security. _______________________________________________________________ WHAT'S INSIDE _______________________________________________________________ PART 1--ABOUT YOUR RETIREMENT BENEFITS How Do You Qualify For Retirement Benefits? How Much Will Your Retirement Benefit Be? Full Retirement Age Early Retirement Delayed Retirement Choosing Your Retirement Date Retirement Benefits For Widows PART 2--ABOUT FAMILY BENEFITS Benefits For Family Members Spouses Benefits Maximum Family Benefits Benefits For A Divorced Spouse PART 3--WHAT YOU NEED TO KNOW WHEN YOU'RE ELIGIBLE FOR RETIREMENT BENEFITS How Do You Sign Up For Social Security? Right To Appeal If You Work And Get Social Security At The Same Time Your Benefits May Be Taxable Pensions From Work Not Covered By Social Security Leaving The United States A Word About Medicare FOR MORE INFORMATION OTHER BOOKLETS AVAILABLE _______________________________________________________________ PART 1--ABOUT YOUR RETIREMENT BENEFITS HOW DO YOU QUALIFY FOR RETIREMENT BENEFITS? ___________________________________________ When you work and pay Social Security taxes (referred to as FICA on some pay stubs), you earn Social Security credits. Most people earn 4 credits per year. The number of credits you need to get retirement benefits depends on your date of birth. If you were born in 1929 or later, you need 40 credits (10 years of work). People born before 1929 need fewer than 40 credits (39 credits if born in 1928; 38 credits if born in 1927; etc.). If you stop working before you have enough credits to qualify for benefits, your credits will remain on your Social Security record. If you return to work later on, you can add more credits so that you qualify. No retirement benefits can be paid until you have the required number of credits. But if you're like most people, you will earn many more credits than you need to qualify for Social Security. These extra credits do not increase your Social Security benefit. However, the income you earn while working will increase your benefit, as you will learn in the next section. HOW MUCH WILL YOUR RETIREMENT BENEFIT BE? _________________________________________ Your benefit amount is based on your earnings averaged over most of your working career. Higher lifetime earnings result in higher benefits. If you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily. Your benefit amount also is affected by your age at the time you start receiving benefits. If you start your retirement benefits at age 62 (the earliest possible retirement age), your benefit will be lower than if you waited until a later age. HERE'S AN IMPORTANT POINT: Social Security will give you a personalized benefit estimate at your request. Call our toll-free telephone number, 1-800-772-1213, to ask for a "Request for Earnings and Benefit Estimate Statement." We will send you a simple form to complete and return. When you mail in this form, we will mail back your complete earnings history along with estimates of your benefits for early retirement, full retirement, and age 70. We'll also give you an estimate of the disability benefits you could receive as well as the amount of benefits payable to your spouse and children due to your retirement, disability, or death If you are age 60 or older, you can get an estimate of your retirement benefits by telephone. Social Security law provides for automatic cost-of-living increases. Once you start receiving benefits, the amount will go up automatically if the cost of living rises. FULL RETIREMENT AGE ___________________ The usual retirement age for people retiring now is age 65. Social Security calls this "full retirement age," and the benefit amount that is payable is considered the full retirement benefit. Because of longer life expectancies, the full retirement age will be increased in gradual steps until it reaches age 67. This change starts in the year 2000, and it affects people born in 1938 and later. Look at the chart below to find your full retirement age. AGE TO RECEIVE FULL SOCIAL SECURITY BENEFITS ____________________________________________ YEAR OF BIRTH FULL RETIREMENT AGE 1937 or earlier 65 1938 65 and 2 months 1939 65 and 4 months 1940 65 and 6 months 1941 65 and 8 months 1942 65 and 10 months 1943-1954 66 1955 66 and 2 months 1956 66 and 4 months 1957 66 and 6 months 1958 66 and 8 months 1959 66 and 10 months 1960 and later 67 ______________________________________ EARLY RETIREMENT ________________ You can start your Social Security benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit. If you take early retirement, your benefits will be reduced based on the number of months you will receive checks before you reach full retirement age. If your full retirement age is 65, the reduction for starting your Social Security at age 62 is about 20 percent; at age 63, it is about 13 1/3 percent; and at age 64, it is about 6 2/3 percent. If your full retirement age is older than 65 (that is, you were born after 1937), you still will be able to take your retirement benefits at age 62, but the reduction in your benefit amount will be greater than it is for people retiring now. For example, John is retiring this year when he turns 62 and he will receive monthly benefits equal to about 80 percent of the benefit amount he would have received had he waited until age 65 to retire. His son, James, was born in 1962 and, based on the revised retirement age schedule, he would be eligible for full retirement benefits at age 67. If James takes early retirement benefits at age 62 like his father, his monthly check will be about 70 percent of the full benefit he would receive if he waited until age 67 to retire. As a general rule, early retirement will give you about the same total Social Security benefits over your lifetime, but in smaller amounts to take account of the longer period you will receive them. HERE'S AN IMPORTANT POINT: Sometimes poor health forces people to retire early. If you are unable to continue working because of poor health, you should consider applying for Social Security disability benefits. The amount of the disability benefit is the same as a full, unreduced retirement benefit. For more information, call us to ask for a copy of the booklet, "Disability" (Publication No. 05-10029). DELAYED RETIREMENT __________________ If you decide to continue working full time beyond your full retirement age, you can increase your Social Security benefit in two ways: o If you're like most people who delay their retirement, you'll be adding a year of high earnings to your Social - Security record. And, as we said earlier, higher lifetime earnings result in higher benefits. o In addition, your benefit will be increased by a certain percentage if you delay retirement. These increases will be added in automatically from the time you reach your full retirement age until you start taking your benefits, or you reach age 70. The percentage varies depending on your year of birth. See the chart below for the increase that will apply to you. Chart Of Increases For Delayed Retirement ___________________________________________ Year Of Birth Yearly Rate of Increase 1917t1924 3% 1925t1926 3.5% 1927t1928 4% 1929t1930 4.5% 1931t1932 5% 1933t1934 5.5% 1935t1936 6% 1937t1938 6.5% 1939t1940 7% 1941t1942 7.5% 1943 or later 8% ___________________________________________ For example, if you were born in 1943 or later, we will add to your benefit an extra 8 percent per year (2/3 of one percent per month) for each year you delay signing up for Social Security beyond your full retirement age. HERE'S AN IMPORTANT POINT: If you decide to delay your retirement, BE SURE TO SIGN UP FOR MEDICARE AT AGE 65. In some circumstances, medical insurance costs more if you delay applying for it. CHOOSING YOUR RETIREMENT DATE _____________________________ If you plan to start your retirement benefits after age 62, it is a good idea to contact Social Security in advance to see which month is best to claim benefits. In some cases, your choice of a retirement month could mean additional benefits for you and your family. It may be to your advantage to have your Social Security benefits start in January, even if you don't plan to retire until later in the year. Depending on your earnings and your benefit amount, it may be possible for you to start collecting benefits even though you continue to work. Under current rules, many people can receive the most benefits possible with an application that is effective in January. If you are not working, or your annual earnings are under the earnings limits explained on pages 11-12, or you plan to start collecting your Social Security when you turn 62, you should apply for benefits 3 months before the date you want your benefits to start. Because the rules are complicated, we urge you to discuss your plans with a Social Security claims representative in the year before the year you plan to retire. RETIREMENT BENEFITS FOR WIDOW(ER)S __________________________________ Widow(er)s can begin receiving benefits at age 60 or age 50 if disabled. If you are receiving widows or widowers (including - divorced widows or widowers) benefits, you can switch to your own retirement benefits (assuming you're eligible and your retirement rate is higher than your widow(er)'s rate) as early as age 62. In many cases, a widow(er) can begin receiving one benefit at a reduced rate and then switch to the other benefit at an unreduced rate at age 65. The rules vary depending on the situation, so you should talk to a Social Security representative about the options available to you. ______________________________________________________________ PART 2--ABOUT FAMILY BENEFITS BENEFITS FOR FAMILY MEMBERS ___________________________ If you're receiving retirement benefits, some members of your family also can receive benefits. Here's a list of those who can: o Your wife or husband age 62 or older; o Your wife or husband under age 62, if she or he is taking care of your child who is under age 16 or disabled; o Your former wife or husband age 62 or older (see "Benefits For A Divorced Spouse" ); o Children up to age 18; o Children age 18-19, if they are full-time students through grade 12; o Children over age 18, if they are disabled. SPOUSES BENEFITS ________________ The full benefit for a spouse is one-half of the retired worker's full benefit. If your spouse takes benefits before age 65, the amount of the spouse's benefit is reducedtto a low of 37.5 percent at 62. However, a spouse who is taking care of a child who is under 16 or disabled gets full (50 percent) benefits, regardless of age. If you're eligible for both your own retirement benefits and for benefits as a spouse, we always pay your own benefit first. If your benefit as a spouse is higher than your retirement benefit, you'll get a combination of benefits equaling the higher spouse benefit. Here's an example: Mary Ann qualifies for a retirement benefit of $250 and a wife's benefit of $400. At age 65, she will receive her own $250 retirement benefit and we will add to this $150 from her wife's benefit, for a total of $400. If she takes her retirement benefit at any time before she turns 65, both the retirement benefit and the wife's benefit will be reduced, even if she doesn't start receiving her wife's benefit until later because her husband hasn't retired yet. MAXIMUM FAMILY BENEFITS _______________________ If you have children eligible for Social Security, each will receive up to one-half of your full benefit. But there is a limit to the amount of money that can be paid to a family. If the total benefits due your spouse and children exceed this limit, their benefits will be reduced proportionately. Your benefit will not be affected. BENEFITS FOR A DIVORCED SPOUSE ______________________________ A divorced spouse can get benefits on a former husband's or wife's Social Security record if the marriage lasted at least 10 years. The divorced spouse must be 62 or older and unmarried. For a divorced spouse to get benefits, the worker also must be 62 or older. If they have been divorced at least 2 years, he or she can get benefits, even if the worker is not retired. The 2-year waiting period for the spouse is waived if the worker got benefits before the divorce. The amount of benefits a divorced spouse gets has no effect on the amount of benefits a current spouse can get. ______________________________________________________________ PART 3--WHAT YOU NEED TO KNOW WHEN YOU'RE ELIGIBLE FOR RETIREMENT BENEFITS HOW DO YOU SIGN UP FOR SOCIAL SECURITY? _______________________________________ You can apply for benefits by telephone or by going to any Social Security office. Depending on your circumstances, you will need some or all of the documents shown on the list below. But don't delay your application because you don't have all the information. If you don't have a document you need, Social Security can help you get it. INFORMATION NEEDED o Your Social Security number; o Your birth certificate; o Your W-2 forms or self-employment tax return for last year; o Your checking or savings account information for direct deposit. o Your military discharge papers if you had military service; o Your spouse's birth certificate and Social Security number if he or she is applying for benefits; o Children's birth certificates and Social Security numbers, if applying for children's benefits; You will need to submit original documents or copies certified by the issuing office. You can mail or bring them to Social Security. We will make photocopies and return your documents. RIGHT TO APPEAL _______________ If you disagree with a decision made on your claim, you can appeal it. The steps you can take are explained in the factsheet, "The Appeals Process" (Publication No. 05-10041), which is available from Social Security. You have the right to be represented by an attorney or other qualified person of your choice. More information is in the factsheet, "Social Security And Your Right To Representation" (Publication No. 05-10075), which is also available from Social Security. IF YOU WORK AND GET SOCIAL SECURITY AT THE SAME TIME ____________________________________________________ You can continue to work and still get retirement benefits as long as your earnings are under certain limits. These limits increase each year as average wages increase. For the current amounts, contact Social Security to ask for the factsheet, "How Work Affects Your Social Security Benefits" (Publication No. 05-10069). You can work and earn up to the limit and still get all your Social Security checks. If your earnings go over the limit, some or all of your benefits will be offset by your earnings. Here's how it works: o IF YOU ARE UNDER 65, $1 in benefits will be deducted for each $2 in earnings above the limit. o IF YOU ARE 65 THROUGH 69, $1 in benefits will be deducted for each $3 in earnings above the limit. Earnings in or after the month you reach age 70 won't affect your Social Security benefits. If other family members receive benefits on your Social Security record, THE TOTAL FAMILY BENEFITS WILL BE AFFECTED BY YOUR EARNINGS. This means we will offset not only your benefits, but those payable to your family as well. If a family member works, however, THE FAMILY MEMBER'S EARNINGS AFFECT ONLY HIS OR HER BENEFITS. A SPECIAL MONTHLY RULE A special rule applies to your earnings for one year, usually your first year of retirement. Under this rule, you can receive a full Social Security check for any MONTH you are "retired," regardless of your yearly earnings. Your earnings must be under a monthly limit. If you're self-employed, the services you perform in your business are taken into consideration as well. If you want more information on how earnings affect your retirement benefit, call us to ask for a copy of the factsheet, "How Work Affects Your Social Security Benefits" (Publication No. 05-10069). This factsheet has the figures for the current annual and monthly earnings limits. REPORTING YOUR EARNINGS If you earn more than the earnings limit and you receive some benefits from Social Security, you must complete an "Annual Report of Earnings." In this report, you provide your exact earnings for the previous year and an estimate for the current year. You do not have to fill out a report if you are 70 or older all year. The "Annual Report of Earnings" must be sent by April 15 of the following year. There is a substantial penalty for not filing this report on time. YOUR BENEFITS MAY BE TAXABLE ____________________________ About 20 percent of people who get Social Security have to pay taxes on their benefits. This provision affects only people who have substantial income in addition to their Social Security. At the end of each year, you will receive a "Social Security Benefit Statement" (Form SSA-1099) in the mail showing the amount of benefits you received. You can use this statement when you are completing your Federal income tax return to find out if any of your benefits are subject to tax. For more information, call the Internal Revenue Service's toll-free telephone number, 1-800-829-3676, to ask for Publication 554, "Tax Information for Older Americans", and Publication 915, "Social Security Benefits and Equivalent Railroad Retirement Benefits." PENSIONS FROM WORK NOT COVERED BY SOCIAL SECURITY _________________________________________________ If you get a pension from work where you paid Social Security taxes, it will not affect your Social Security benefits. However, if you get a pension from work which was not covered by Social Security--for example, the Federal civil service or some State or local government employment--your Social Security benefit may be lowered or offset. For more information, call Social Security to ask for the factsheets, "Government Pension Offset"-for government workers who may be eligible for Social Security benefits on the record of a husband or wife (Publication No. 05-10007) and "A Pension From Work Not Covered By Social Security"-for government workers who also are eligible for their own Social Security benefits (Publication No. 05-10045). LEAVING THE UNITED STATES _________________________ If you are a United States citizen, you can travel or live in most foreign countries without affecting your eligibility for Social Security benefits. However, there are a few countries- Albania, Cuba, Kampuchea, North Korea, Vietnam, and many of the former republics of the U.S.S.R.-where we cannot send Social Security checks. If you work outside the United States, different rules apply in determining if you can get your benefit checks. Most people who are neither U.S. residents nor U.S. citizens will have up to 15 percent of their benefits withheld for Federal income tax. For more information, call us to ask for a copy of the booklet, "Your Social Security Checks While You Are Outside the United States" (Publication No. 05-10137). A WORD ABOUT MEDICARE _____________________ Medicare is a health insurance plan for people who are 65 or older. People who are disabled or have permanent kidney failure can get Medicare at any age. Medicare has two parts-hospital insurance and medical insurance. Most people have both parts. Hospital insurance, sometimes called Part A, covers - inpatient hospital care and certain follow-up care. You have already paid for it as part of your Social Security taxes while you were working. Medical insurance, sometimes called Part B, pays for physicians' services and some other services not covered by hospital insurance. Medical insurance is optional, and a premium is charged. Most people are already getting Social Security benefits when they turn 65, and their Medicare starts automatically. But if you're not getting Social Security, you should sign up for Medicare close to your 65th birthday, even if you do not plan to retire. For more information, call us to ask for the booklet, "Medicare" (Publication No. 05-10043). HELP FOR LOW-INCOME MEDICARE BENEFICIARIES If you have a low income and few resources, your State may pay your Medicare premiums and, in some cases, other "out-of-pocket" Medicare expenses such as deductibles and coinsurance. Only your State can decide if you qualify for help under this program. If you think you may qualify, contact your State or local medical assistance (Medicaid) agency, social service office, or welfare office. For more information, contact Social Security to request a copy of the factsheet, "Help For Low-Income Medicare Beneficiaries" (Publication No. 05-10079). _______________________________________________________________ FOR MORE INFORMATION For more information, write or visit any Social Security office. Or phone our toll-free number, 1-800-772-1213, and speak to a representative any business day 7 a.m. to 7 p.m. The best times to call are early in the morning and early in the evening. And if you can, it's best to call later in the week and later in the month. When you call, have your Social Security number handy. The Social Security Administration treats all calls confidentially-whether they're made to our toll-free number or to one of our local offices. We also want to ensure that you receive accurate and courteous service. That is why we have a second Social Security representative listen to some incoming and outgoing telephone calls. _______________________________________________________________ OTHER BOOKLETS AVAILABLE Social Security has a number of publications that contain information about other Social Security programs. Contact Social Security to get a free copy of any of these publications. They include: o "Understanding Social Security" (Publication No. 05-10024) --Comprehensive explanation of all the Social Security programs. o "Disability" (Publication No. 05-10029)--Explains Social Security disability benefits. o "Medicare" (Publication No. 05-10043)--Explains Medicare hospital insurance and medical insurance. o "Survivors" (Publication No. 05-10084)--Explains Social Security survivors benefits. o "SSI" (Publication No. 05-11000)--Explains this program which provides a basic income to people 65 or older, disabled, or blind who have limited income and resources. _______________________________________________________________